MASKS & CLERK (A FIRM) v. DVN (GROUP) LTD

DCCJ 2392/2004

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 2392 OF 2004

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DECISION

1.  This is the Defendant’s application for leave to appeal to the Court of Appeal in respect of the decision (“the Decision”) handed down on 22^nd February, 2005.

2.  In its written submissions, the Defendant set out 7 principles, and submitted that various parts of the Decision violated these principles; hence leave to appeal should be given.

3.  The Defendant stated Principle 1 as: -

‘	Para. 14/4/3 of Hong Kong Civil procedure 2004 at page 160 stated that:
	“	The defendant may show cause by “affidavit or otherwise”.  In practice, the masters will generally require an affidavit from the defendant before they will feel “satisfied” that the defendant is entitled to leave to defend save in exceptional or obvious cases, e.g. in a small claim, a letter from the defendant acting in person living a long way from the court raising a genuine issue may be sufficient …”.’

4.  The Defendant referred to paragraph 7 of the Decision, namely, “……. Had there been any such allegation, no doubt there should have been some trace of it.  No weight can be attached to such allegation, which is not made under oath.  Therefore there cannot be any triable issue in this regard” and submitted that nowhere in the Decision indicated that the Court when deciding no weight could be attached to the allegation of Mr. Michael Shone and/or Miss Susanna Chiu did take into consideration the following undisputed facts, namely:-

(a)	Mr. Michael Shone was the person responsible to negotiate with the Plaintiff about the outstanding invoices but Mr. Shone has already left the Defendant and moved back to United Kingdom;
(b)	The Defendant moved its office twice, respectively in May 2000 and in April 2003.

5.  The Defendant submitted that had the Court taken this information into consideration, the Court would have found that (a) it would be unreasonable and unrealistic to expect Mr. Michael Shone to be able to foresee that there would be dispute in the future concerning the outstanding invoices of the Plaintiff and therefore took away the attendance note for his safe custody; and (b) the Defendant had a reasonable excuse of not able to produce the attendance note.  But according to his letter dated 6 October 2004 Mr. Michael Shone said, “I have consulted my diary and notes for the year 2000, to refresh my memory of this matter.”  So he had his diary and the relevant notes with him when he wrote the said letter.  He also said in the letter :

“From an examination of my files, I recall a dispute arising with the Plaintiff concerning the costs of work done in connection with registration of various Trade Marks….”

So he also had the relevant files connected with this case when writing the said letter.  Hence he had the relevant documents in his custody at the material time.  The Defendant could have asked him to produce the relevant documents to refute the Plaintiff’s application.  But this was not done.  Hence the Defendant’s submission cannot stand.

6.  The Defendant further submitted that had the Court taken the above-said information into account the Court would have found that this is an exceptional situation justified to accept Mr. Michael’s letter as evidence.  This is not any exceptional situation.  The Defendant could have asked Mr. Shone to make an affirmation.  There was no such affirmation.  In any event the said letter was treated as evidence.

7.  The Defendant’s Principle 2 is:

‘	Para. 14/4/4 of Hong Kong Civil procedure 2004 at page 160 stated that:
	“	Matter of hearsay is admissible in the defendant’s affidavit … provided that the sources and grounds of information or belief are disclosed.”’

8.  The Defendant submitted that it is not in dispute that Mr. Michael Shone had direct involvement before his departure; in the circumstances, the letter of Mr. Michael Shone is admissible and that the finding that no weight could be attached to the allegation of Mr. Michael Shone is obviously against Principle 2.  It is not my finding that the letter of said letter is admissible.  I merely attached no weight to it for the reasons stated in paragraphs 6 and 7 of the Decision.

9.  The Defendant stated Principle 3 as follows:-

‘	Para. 14/4/9 of Hong Kong Civil procedure 2004 at page 163 stated that:
	“	However, practitioners are reminded that O.14 is not intended to be a mini-trial of the action on affidavits ... That is not a proper course for the court to take.  It will in future be sufficient for the court to ask itself the simple question:  ‘Is what the defendant says credible?’ If so, he must have leave to defend…” ’

10.  The Defendant referred to paragraph 7 of the Decision, namely, “No weight can be attached to such allegation, which is not under oaths”, and submitted that the Court did not believe the Defendant because no trace could be found in the correspondence adduced by the parties.  This is so because the Court has failed to take any or sufficient account of the information as stated in the undisputed facts (a) and (b).  Whether or not the Court believes the Defendant’s allegation is not a factor for the Court to shut out the Defendant (at the O.14 hearing).

11.  The allegation is:  Did Mr. Michael Shone of the Defendant tell Ms. Dalgliesh of the Plaintiff that any payment to be made by the Defendant should be in “accord and satisfaction” of the Plaintiff’s claims?  In his letter dated 6 October 2004 addressed to Susanna Chiu of the Defendant, he said, 

‘Having received instructions from you as Group Financial Controller to reach a final settlement with the Plaintiff, I am sure that I advised that any payment to be made by DVN (group) Ltd should be in “accord and satisfaction” of all the Plaintiff’s claims.  I recall telling Ms Dalgliesh this was your position.’

12.  Mr. Michael Shone did not name the person(s) he advised.  But this letter was addressed to Susanna Chiu , so he must be referring to the person(s) of the Defendant whom he advised.  But there is no evidence that the person(s) advised did make an offer of the payment to the Plaintiff in “accord and satisfaction” of all the Plaintiff’s claims.  Furthermore, there is no evidence that the Plaintiff did accept such an offer (if any).  Although Mr. Michael Shone said that he “recall telling Ms Dalgliesh this was your position”, it is neither here nor there.  The letter stated that “The August 2000 payment of HK$45,190 was made to the Plaintiff on the basis of a full and final settlement of all and any claims”. But there is no evidence to support such a statement.

13.  The Defendant set out Principles 4 and 5 as follows:-

“…. a complete defence need not be shown.  The defence set up need only show that there is a triable issue or question or that for some other reason there ought to be a trial; and leave to defend ought to be given unless there is clearly no defence in law such as could have been raised on the former demurrer to the plea and no possibility of a real defence on the question of fact.”

“Where there are unexplained features of both the claim and the defence which are disturbing because they bear the appearance of falsity and disreputable business dealings and questionable conduct, the court should not make tentative assessments of the respective chances of success of the parties or the relative strengths of their good or bad faith, and should not on such an examination grant the defendant conditional leave to defend, but should give unconditional leave to defend.”

14.  The Defendant submitted that it is not in dispute that the Defendant verbally requested the Plaintiff to abandon the trade mark applications in the middle of 2000.  Accordingly, the Plaintiff’s statement of account dated 30^th June 2000 and the facsimile of the Plaintiff dated 7^th August 2000 were sent to the Defendant.  It is therefore important to know when the Plaintiff did stop the services of its oversea agent.  If the Plaintiff received instruction before 30^th June 2000 but failed to inform their oversea agent(s) there and then for whatever reason, the Defendant has already shown a triable issue and serious facts in dispute pursuant to Principle 4 and the Defendant should be entitled to unconditional leave to defend according to Principle 5.  There is no evidence showing that the Plaintiff received instruction before 30^th June, but failed to inform their oversea agent(s) there and then.  There is no evidence showing any feature of falsity and disreputable business dealings and questionable conduct in this case.

15.  The Defendant set out Principle 7 as follows:-

‘	Para. 14/4/11 of Hong Kong Civil procedure 2004 at page 164 stated that:
	“	The following principles are laid down in cases decided under this Order.  Leave to defend should be given where the defendant raises any substantial question of fact which out to be tried; or there is a fair dispute to be tried as to the meaning of the document on which the claim is based; … or where the alleged facts are of such a nature as to entitle the defendant to interrogate the plaintiff or to cross-examine his witness on his affidavit …” ’

16.  The Defendant submitted that the Plaintiff applied for summary judgment under Order 14 but not Order 14A.  At no time during the course of submission did either party or the Court on its own motion move to decide the wording in the Plaintiff’s facsimile dated 7^th August 2000 under O.14A.  Therefore the dispute as to the meaning of the wording in the said facsimile on which the Plaintiff based its claim should be decided at the trial hearing (instead of the O.14 hearing) under Principle 7.  Even if the Court could do so, it should consider the meaning of “all outstanding” instead of the wording “outstanding” alone.

17.  It is wrong to say that the Plaintiff based its claim on the said facsimile.  It is the Defendant which produced the said facsimile exhibited as “MSL – 1”.  It is the Defendant which relied on the said facsimile to refute the Plaintiff’s claim.  The Plaintiff did not make any claim on any of the invoices set out in the said facsimile.  In paragraph 13 of its written submission dated 20^th November, 2004 the Defendant referred to the phrase “all outstanding invoices”.  There the Defendant submitted that the phrase must have the meaning that the invoices in question were final invoices.  In response to that submission this Court had to and did make a ruling upon the meaning of the word “outstanding”.  Therefore it is not a construction made under Order 14A.

18.  In paragraph 12 of the Decision this Court referred to the word “outstanding”, but in paragraph 11 of the Decision did consider the meaning of the phrase “all outstanding invoices”.

19.  The Defendant set out Principle 6 as follows:-

‘	Para. 14/4/10 of Hong Kong Civil procedure 2004 at page 164 stated that:
	“	Circumstances which might afford “some other reason for trial” might be, where, e.g. the defendant is unable to get in touch with some material witness who might be able to provide him with material for a defence…” ’

20.  The Defendant referred to paragraph 16 of the Decision and commented  that in relation to the third triable issue the Court’s Decision is against Principle 6, and concluded that there is no foundation for the Court to jump to the conclusion that the Plaintiff has adduced positive evidence to support that the service were incurred after the abandonment.  The Defendant submitted that the words “we attach our final debit notes in respect of those applications for work we had undertaken prior to abandonment” in the Plaintiff’s letter of 8^th September 2000 is no more than a self serving statement; it is not a positive evidence as such.  In fact, nowhere in the invoices attached in the Plaintiff said letter of 8^th September, 2000 did indicate the period of work done.  But the letter of 8^th September, 2000 is a piece of evidence, which cannot be disregarded.

21.  The Defendant further submitted that the Court had failed to take any or sufficient account of the fact that the oversea agents were under the instructions of the Plaintiff.  From the invoices of the Plaintiff, it is obvious that the Plaintiff would by no means disclose the information of their oversea agents to the Defendant.  Nowhere in the Decision indicated that the Court has considered this factor and decided whether it is the reason justifying the Defendant to be granted leave to defend.  Hence, the finding in Paragraph 16 is a departure of Principle 6.  I do not accept this submission.  It is unsafe to reach such a conclusion merely by looking at the invoices concerned.

22.  Based on the reasons aforesaid, I dismiss the Defendant’s application for leave to appeal to the Court of Appeal.

Costs

23.  I make an order nisi, to be made absolute in 14 day’s time, that the Defendant is to pay the costs of this application to the Plaintiff, to be taxed, if not agreed.